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TAHOE CITY, Calif. — A prime piece of real estate in downtown Tahoe City is in the process of being sold to a buyer who intends to build high-quality lodging.

The Henrikson building at 255 North Lake Blvd. is in escrow, while the interested buyer, Palo Alto, Calif.-based Kila Properties, evaluates the property for challenges associated with its redevelopment.

“The hope is we’re able to bring high-quality lodging to Tahoe City that helps the revitalization of the area,” said Samir Tuma, CEO of Kila Properties.

The intent is to build a lodging establishment that plugs into the community and its assets, including the Tahoe City Golf Course, Lake Tahoe and the Truckee River, he said.

Steve Hoch, executive director of the Tahoe City Downtown Association, is in favor of the idea.

“Every time we do surveys we find that we are still short on quality lodging here in Tahoe City,” he said.

Construction of the Henrikson building started around 1957 by former owner and longtime Tahoe resident Ollie Henrikson, with the intent of building lodging for the 1960 Winter Olympic Games, said Brad Hester, of Hester Real Estate, who brokered the deal to Kila.

“It’s a work in progress that never progressed,” he said, referring to the building.

The two-floor, stucco building with red and blue trim currently houses several businesses.

“Not everyone’s excited,” said Vicky Biggs, owner of Vicky’s Cyber Cafe, located inside. “They’re displacing six or seven businesses in town, with not a lot of community help to get us relocated, if we can.”

Finding available space in Tahoe City that meets business needs and is affordable will not be easy, Biggs said.

Barry Giansiracusa, co-owner of Ring Around the Rosie, located in the building, said rent is “very affordable,” explaining how several business got their start there, including Tahoe Dave’s Skis & Boards — then known as Dave’s Ski Shop.

“There’s a huge amount of history with this building, with Ollie and his family,” he said.

Henrikson’s two sons inherited the building after Ollie’s death in 2012 and have decided to the sell the 1.4-acre property, Hester said.

Negotiations between the owners and Kila Properties began about three months ago, Tuma said.

Should the sale go through — at which point the price would be disclosed — Kila Properties would demolish the existing building, Tuma said, and in conjunction with redevelopment, it would be brought to current code.

Kila Properties has already started work with Tahoe Regional Planning Agency, Placer County, TCDA and other stakeholders.

Since the sale is a process, it’s unclear when the deal may close, Tuma said.

Ideally, the sale would close by the end of spring 2014, Hester said, with construction possibly starting two years afterward.